Former RIM employee sanctioned by OSC

A former employee of Research in Motion Ltd. has been prohibited from becoming an officer or director for five years after a panel of the Ontario Securities Commission found that he acted “contrary to the public interest” when he purchased shares in a publicly traded technology company RIM was considering buying.

The OSC panel made its finding against Paul Donald in August despite concluding that he did not breach insider trading rules when he bought shares in Certicom Corp. in 2008. He had learned about the potential interest in Certicom at a RIM golfing event.

Mr. Donald was ordered Thursday to pay $150,000, which represents a portion of the OSC’s investigation and litigation costs. The OSC noted that the sanctions do not include any kind of ban on trading or acquiring securities.

“Our client is disappointed in the Commission’s decision and is considering his rights of appeal now that the OSC hearing is complete,” Mr. Donald’s lawyer Kevin Richard said in an emailed statement Thursday evening.

Certicom was ultimately purchased by RIM in 2009, but the OSC panel concluded that Mr. Donald was not in a “special relationship” with Certicom when he made the stock purchases because, while RIM’s acquisition of Certicom was a serious possibility at the time, the smart phone maker had not reached the stage of proposing to make a bid to acquire the technology security company.

Nonetheless, he purchased the Certicom shares with knowledge of material facts that had not been generally disclosed, the panel said.

The OSC commissioners noted that market participants and officers of public companies, such as Mr. Donald, are expected to adhere to a high standard of behaviour. By purchasing securities with knowledge of material facts which had not been generally disclosed, Mr. Donald “clearly failed to meet that standard and did so in a manner that impugns the integrity of Ontario’s capital markets,” the OSC said in the August ruling.